The Food Corporation of India was established in 1964, at a time when India was still suffering from food grain shortage.
When the green revolution started, it was expected that country would no longer depend on foreign imports for food grains, and our farmers would produce to feed the whole country.
But who will manage and store the vast amounts of food grains produced?
It was then that the FCI was conceived as the premier agency to manage the procurement and stocking of rice and wheat – the two key outputs of green revolution.
4 Things wrong with FCI
The FCI has been criticised on four primary grounds in the past.
First, that is operationally expensive, inefficient and corrupt.
Secondly, it has been criticised by the even the Supreme Court as having poor storage facilities, which is affected by loss caused by pests and rats.
Thirdly, there is also the problem of “human rat”. Whenever food grains have been found siphoned off from FCI godowns, it was said that “rats” ate away all the food grains.
It is for this reason, that a former Chairman of FCI , in the 1990s called it the “Food Corruption of India.”
Fourthly, its complete lack of pro-active liquidation policy. Despite having (a) vast buffers of food-grains, and (b) no place to store them, FCI is not seen keen on releasing the stock in Open Market or through export.
FCI has some achievements too
The FCI is not without achievements.
Firstly, the entire Food Security Act depends on the robust set of FCI to reach food-grains to the poor. Thus it has served as a lifeline to starving people.
Secondly, in the Covid-19 scenario, given its vast reach and operations, it is uniquely positioned to cater to grain procurement & moving them.
Thirdly, the criticism that subsiding food – a basic good – through running an agency like FCI which is inefficient, slow, huge, and corrupt is also not very valid. This is because 60% of the cost of acquisition, procurement and distribution are transfers to the farmers.
5 Suggestions for Reforms in FCI
One, It is currently heavily reliant on rail, and only 24% of the grain moved by it is by roads. but road transport has much wider reach – deeper into India’s rural areas. Also, road transport is better for meeting emergencies.
Two, it must follow the pre-positioning shipment policy to hotspots. This means that for chronically starved areas, food grains could be stored nearer to the target population.
For example, in Covid – 19 times, storing food grains in block and panchayats, will provide a sense of assurance and psychological comfort to people. When we have physical proximity to sufficient food, we already win half the battle against food insecurity.
Three, the FCI currently follows the FIFO principle – first in- first out. This means that older grains stored for long will be released first. There are two problems with this.
First, often food grains stored for long may not be as fit to consume as the latest produce. But the FIFO principle ensures that all food grains must have undergone a certain period of storage – whose hygienic and protection from infestation cannot be assured – before it is released.
And second, it slows down the movement of good grains, as the grains quickly available is not moved, but the one that is in storage for long is moved first – which takes time.
Four, Given its vast infrastructure, reach and network, it can extend its functions to help farmer producer organisations in the procurement of seeds, fertilisers, packaging material etc.
Five, The FCI has to be re-imagined on the lines of the Shanta Kumar Committee Report – in designating it as an “Agency for Innovation in Food Management Systems.”.